<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Renaissance Solutions, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
PRELIMINARY COPIES
RENAISSANCE SOLUTIONS, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD NOVEMBER 15, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders of
Renaissance Solutions, Inc., a Delaware corporation (the "Company"), will be
held on Friday, November 15, 1996 at 10:00 a.m. at the offices of Hale and
Dorr, 60 State Street, Boston, Massachusetts (the "Meeting") for the purpose
of considering and voting upon the following matters:
1.To approve an amendment to the Company's 1995 Equity Incentive Plan (the
"Plan") increasing from 1,100,000 to 2,100,000 the number of shares of
Common Stock authorized under the Plan; and
2.To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
The Board of Directors has fixed the close of business on October 17, 1996
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting and at any adjournments thereof.
By order of the Board of Directors,
Harry M. Lasker,
Secretary
October 22, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. NO
POSTAGE NEED BE AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
PRELIMINARY COPIES
RENAISSANCE SOLUTIONS, INC.
LINCOLN NORTH 55 OLD BEDFORD ROAD LINCOLN, MASSACHUSETTS 01773
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Renaissance Solutions, Inc. (the
"Company") at the Special Meeting of Stockholders to be held on Friday,
November 15, 1996 at 10:00 a.m. at the offices of Hale and Dorr, 60 State
Street, Boston, Massachusetts and at any adjournments thereof (the "Meeting").
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Special Meeting. Any proxy
may be revoked by a stockholder at any time before its exercise by delivery of
a written revocation to the Secretary of the Company. Attendance at the
Meeting will not itself be deemed to revoke a Proxy unless the stockholder
gives affirmative notice at the Meeting that the stockholder intends to revoke
the Proxy and vote in person.
On October 17, 1996, the record date for determination of stockholders
entitled to vote at the Meeting, there were outstanding and entitled to vote
an aggregate of [ ] shares of Common Stock of the Company, $.0001 par
value per share (the "Common Stock"). Each share entitles the record holder to
one vote on each of the matters to be voted upon at the Meeting.
THE NOTICE OF SPECIAL MEETING, THIS PROXY STATEMENT AND THE ENCLOSED PROXY
ARE BEING MAILED TO STOCKHOLDERS ON OR ABOUT OCTOBER 22, 1996.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 31, 1996
with respect to the beneficial ownership of shares of Common Stock by (i) each
person known to the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) the directors of the Company, (iii)
the Chief Executive Officer and the other four executive officers listed in
the Summary Compensation Table below (the "Named Executive Officers"), and
(iv) the directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP(1)
---------------------------
NAME AND ADDRESS PERCENT OF
OF BENEFICIAL OWNER NUMBER OF SHARES CLASS
------------------- ---------------- ----------
<S> <C> <C>
Harry M. Lasker (2)............................... 975,785 13.9%
c/o Renaissance Solutions, Inc.
Lincoln North
55 Old Bedford Road
Lincoln, MA 01773
David A. Lubin (3)................................ 975,786 13.9
c/o Renaissance Solutions, Inc.
Lincoln North
55 Old Bedford Road
Lincoln, MA 01773
Melissa E. Norton (4)............................. 975,786 13.9
c/o Renaissance Solutions, Inc.
Lincoln North
55 Old Bedford Road
Lincoln, MA 01773
Gemini Consulting, Inc. (5)....................... 783,600 10.2
25 Airport Road
Morristown, NJ 07960
Putnam Investments, Inc. (6)...................... 705,783 10.1
One Post Office Square
Boston, MA 02109
David P. Norton (7)............................... 975,786 13.9
Robert S. Kaplan (8).............................. 24,902 *
John F. Rockart (9)............................... 12,500 *
Gresham T. Brebach, Jr. (10)...................... 18,012 *
Ronald K. Bohlin (11)............................. 16,256 *
George A. McMillan (12)........................... 50,075 *
All directors and executive officers as a group (8
persons) (13).................................... 3,049,102 42.9
</TABLE>
- --------
*Less than 1%
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and
Exchange Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or
shared voting power or investment power and also any shares which
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<PAGE>
the individual has the right to acquire within 60 days after August 31,
1996 through the exercise of any stock option or other right. The
inclusion herein of such shares, however, does not constitute an admission
that the named stockholder is a direct or indirect beneficial owner of
such shares. Unless otherwise indicated, each person or entity named in
the table has sole voting power and investment power (or shares such power
with his or her spouse) with respect to all shares of capital stock listed
as owned by such person or entity.
(2) Includes 117,023 shares held by The Harry M. Lasker Children's Trust, the
beneficiaries of which are Mr. Lasker's children and a trustee of which
is Mr. Lasker's spouse, as to which shares Mr. Lasker disclaims
beneficial ownership. Also includes 50,000 shares of Common Stock subject
to a stock option granted to Gemini Consulting, Inc. ("Gemini").
(3) Includes 82,856 shares held by The David A. Lubin Children's Trust, the
beneficiaries of which are Mr. Lubin's children, as to which shares Mr.
Lubin disclaims beneficial ownership. Also includes 50,000 shares of
Common Stock subject to a stock option granted to Gemini.
(4) Includes 50,000 shares of Common Stock subject to a stock option granted
to Gemini. Ms. Norton is the spouse of David P. Norton, the President,
Chief Executive Officer and a Director of the Company.
(5) Consists of warrants to purchase 633,600 shares of Common Stock from the
Company and options to purchase an aggregate of 150,000 shares of Common
Stock from Messrs. Lasker and Lubin and Ms. Norton.
(6) The information reported is based on a Schedule 13G, dated September 9,
1996, filed with the Securities and Exchange Commission by Putnam
Investments, Inc. ("PI"), Marsh & McLennan Companies, Inc. ("MMC"),
Putnam Investment Management, Inc. ("PIM") and The Putnam Advisory
Company, Inc. ("PAC"). PI is a registered investment advisor, in which
capacity it advises PIM and PAC and has shared voting power with respect
to 121,800 shares and shared dispositive power with respect to 705,783
shares. PIM has shared dispositive power with respect to 548,283 shares.
PAC has shared voting power with respect to 121,800 shares and shared
dispositive power with respect to 157,500 shares. MMC is the parent
holding company of PI. PI and MMC disclaim beneficial ownership of such
shares.
(7) Includes 975,786 shares held by Melissa E. Norton, the spouse of Mr.
Norton, as to which shares Mr. Norton disclaims beneficial ownership.
Also includes 50,000 shares of Common Stock subject to a stock option
granted to Gemini.
(8) Includes 14,900 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(9) Consists of 12,500 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(10) Consists of 18,012 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(11) Consists of 16,256 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(12) Includes 26,566 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
(13) Includes 88,234 shares of Common Stock subject to outstanding stock
options which are exercisable within the 60 day period following August
31, 1996.
VOTES REQUIRED
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting shall constitute a quorum for
the transaction of business at the Meeting. Shares of Common Stock
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<PAGE>
present in person or represented by proxy (including shares of Common Stock
which abstain or do not vote with respect to the matter presented for
stockholder approval) will be counted for purposes of determining whether a
quorum exists at the Meeting.
The affirmative vote of a majority of the shares present or represented and
voting on the matter is required for the approval of the amendment to the
Company's 1995 Equity Incentive Plan.
Shares which abstain from voting, and shares held in "street name" by
brokers or nominees who indicate on their proxies that they do not have
discretionary authority to vote such shares as to a particular matter, will
not be counted as votes in favor of such matter, and will also not be counted
as votes cast or shares voting on such matter. Accordingly, abstentions and
"broker non-votes" will have no effect on the voting on approval of the
amendment to the Company's 1995 Equity Incentive Plan.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives reimbursements
for expenses incurred in service of the Company as a director, receives a
quarterly retainer of $2,500 and participates in the Company's 1995 Director
Stock Option Plan.
1995 Director Stock Option Plan
The 1995 Director Stock Option Plan (the "Director Plan") was adopted by the
Board of Directors and approved by the stockholders of the Company in January
1995. Under the terms of the Director Plan, directors of the Company who are
not employees of the Company or any subsidiary of the Company are eligible to
receive non-statutory options to purchase shares of Common Stock. A total of
50,000 shares of Common Stock may be issued upon exercise of options granted
under the Director Plan. As of August 31, 1996, Mr. Kaplan and Dr. Rockart had
each been granted options to purchase 10,000 shares at an exercise price of
$12.25 per share and options to purchase 2,500 shares at an exercise price of
$28.75 per share, and 25,000 shares remained eligible for future option grants
under the Director Plan.
Each eligible director is granted an option to purchase 10,000 shares of
Common Stock on the date of his or her initial election to the Board of
Directors. Annual options to purchase 2,500 shares of Common Stock are granted
to each eligible director on April 15 of each subsequent fiscal year. The
exercise price of options granted under the Director Plan is equal to the
closing price of the Common Stock on the Nasdaq National Market on the date of
grant.
Options granted under the Director Plan are not transferrable by the
optionee except by will or by the laws of descent and distribution. No option
is exercisable after the expiration of five years from the date of grant.
COMPENSATION OF EXECUTIVE OFFICERS
Employment Agreements
The Company is a party to employment agreements (the "Employment
Agreements") with each of Messrs. Lasker, Lubin and Norton (the "Principals")
for the period commencing January 31, 1995 and ending January 31, 1997.
Pursuant to the Employment Agreements, each of Mr. Lasker and Mr. Lubin is
employed as a Co-Chairman of the Company and Mr. Norton is employed as
President and Chief Executive Officer of the Company. The Employment
Agreements originally provided for an annual base salary of $500,000.
Effective July 1, 1996, the Employment Agreements were amended to provide for
an annual base salary of $375,000. Each Principal also is eligible for bonuses
at the discretion of the Board of Directors if the Principal satisfies
targeted performance objectives. Each Employment Agreement provides that the
Principal's employment may be terminated by the Company for "cause" (as
defined in the Employment Agreement) or upon the death or disability of the
Principal. Each Employment Agreement also contains covenants by the Principal
not to solicit any of the Company's employees or customers or disclose or use
any of the Company's proprietary information
4
<PAGE>
for a period of two years following the termination of the Principal's
employment and, in the event that the Principal is terminated for cause, not to
compete with the Company during such two year period. Each Principal has agreed
to assign his right, title and interest to any inventions, software and other
works created by him or at his direction to the Company.
The Company is also a party to employment agreements with each of Messrs.
Gresham T. Brebach, Ronald K. Bohlin and George A. McMillan (the "Executive
Agreements"). The Executive Agreements provide for annual salaries of $375,000,
$300,000 and $250,000 for Messrs. Brebach, Bohlin and McMillan, respectively.
Under the Executive Agreement, each officer agrees not to disclose any
confidential information of the Company. Pursuant to the Executive Agreement,
all inventions and intellectual property rights therein, developed, acquired or
conceived by the officer during the term of his employment become the exclusive
property of the Company. Each Executive Agreement provides that for a period of
two years after the date of termination of employment, the officer shall not
solicit any of the Company's employees or customers. Each Executive Agreement
may be terminated upon 30 days' written notice by the Company or the officer
for any reason or immediately by the Company in the event that it believes that
the officer has acted in a manner detrimental to the Company's best interests.
In addition, under each Executive Agreement, in the event of certain changes in
control of the Company (as defined), all unvested stock options then held by
such officer shall immediately become exercisable as of the date of such
termination.
Summary Compensation
The following table sets forth certain information with respect to the annual
and long-term compensation of the Chief Executive Officer of the Company and
each of the four other most highly compensated executive officers of the
Company (the "Named Executive Officers") for the two years ended December 31,
1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------- ------------
RESTRICTED ALL OTHER
NAME AND SALARY BONUS STOCK COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) AWARDS($) ($)(2)
------------------ ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David P. Norton......... 1995 $500,000(1) $ 0 $-- $500(5)
President and Chief Ex- 1994 250,000 473,643(2) -- 500(5)
ecutive Officer
Harry M. Lasker......... 1995 500,000(1) 0 -- 500(5)
Co-Chairman and Secre- 1994 250,000 322,601(2) -- 500(5)
tary
David A. Lubin.......... 1995 500,000(1) 0 -- 500(5)
Co-Chairman and Trea- 1994 250,000 374,858(2) -- 500(5)
surer
Gresham T. Brebach, 1995 373,558 69,711 -- 0
Jr.....................
Executive Vice Presi-
dent--Client Services
George A. McMillan...... 1995 250,000(1) 77,500(3) -- 500(5)
Vice President, Chief 1994 238,269 33,750 -- (4) 500(5)
Financial Officer
and Chief Operating Of-
ficer
</TABLE>
- --------
(1) Includes $50,000 paid to the Named Executive Officer as salary in 1995
which he has repaid to the Company in 1996 in connection with the election
by the Company's Co-Chairmen and Chief Executive Officer to permanently
forego a total of $150,000 in compensation to which they were otherwise
entitled in 1995.
5
<PAGE>
(2) Includes amounts payable in 1995 for services rendered by the Named
Executive Officer in 1994.
(3) Includes $15,000 payable in 1996 for services rendered by the Named
Executive Officer in 1995.
(4) On January 17, 1994 the Company made a restricted stock award of 37,509
shares of Common Stock (after giving effect to the Company's reorganization
in April 1995) to Mr. McMillan. Mr. McMillan paid the Company $150 for such
award, representing the fair market value of the award as determined by the
Board of Directors on the date of the grant. The shares were granted
subject to a repurchase option in favor of the Company, which option lapses
over a five year period with respect to 10%, 20%, 20% and 50% of the shares
on July 7, 1994, July 6, 1995, July 6, 1996 and July 6, 1998 (representing
the day following the first anniversary of Mr. McMillan's date of hire and
the second, third and fifth anniversaries of the date of hire),
respectively.
(5) Represents the Company's 401(k) profit-sharing plan matching contribution.
Option Grants
The following table sets forth certain information concerning grants of stock
option made during fiscal 1995 to each of the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTIONS TERMS(2)
------------------------------------ -----------------------
NUMBER OF PERCENT OF TOTAL EXERCISE
SECURITIES OPTIONS GRANTED PRICE
UNDERLYING TO EMPLOYEES PER EXPIRATION
NAME OPTIONS GRANTED IN FISCAL YEAR SHARE DATE(1) 5% 10%
---- --------------- ---------------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
David P. Norton......... -- -- -- -- -- --
Harry M. Lasker......... -- -- -- -- -- --
David A. Lubin.......... -- -- -- -- -- --
Gresham T. Brebach,
Jr. ................... 200,048(3) 28% $8.00 1/31/05 $ 1,006,473 $ 2,550,600
George A. McMillan...... 25,006(3) 3 8.00 1/31/05 125,809 318,825
</TABLE>
- --------
(1) The expiration date of an option is the tenth anniversary of the date on
which the option was originally granted. The exercisability of these
options is accelerated upon the occurrence of a change in control.
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10%, compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the Common Stock, the
optionholders' continued employment through the option period, and the date
on which the options are exercised.
(3) These stock options are exercisable in four equal annual installments
commencing on January 4, 1996, in the case of Mr. Brebach, and on July 7,
1994, in the case of Mr. McMillan.
6
<PAGE>
Year-End Option Table
The following table summarizes certain information regarding stock options
held as of December 31, 1995 by each of the Named Executive Officers. No stock
options were exercised by any of the Named Executive Officers during 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
NAME (#) ($)(1) (#) ($)(2)
---- ----------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
David P. Norton......... -- -- -- / -- -- / --
Harry M. Lasker......... -- -- -- / -- -- / --
David A. Lubin.......... -- -- -- / -- -- / --
Gresham T. Brebach,
Jr..................... -- -- 0/200,048 $0/$1,250,300
George A. McMillan...... -- -- 12,503/12,503 78,144/78,144
</TABLE>
- --------
(1) Based on the fair market value of the Common Stock as of December 29, 1995
($14.25 per share) less the option exercise price, multiplied by the
number of shares underlying the options.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Director is responsible
for establishing compensation policies with respect to the Company's executive
officers, including the Chief Executive Officer, the Co-Chairmen and the other
executive officers named in the Summary Compensation Table, and setting the
compensation for these individuals.
The Compensation Committee seeks to achieve three broad goals in connection
with the Company's executive compensation programs and decisions regarding
individual compensation. First, the Compensation Committee structures
executive compensation programs in a manner that the Committee believes will
enable the Company to attract and retain key executives. In order to ensure
continuity of certain key members of management, the Company has entered into
multi-year employment contracts. Second, except as described below, the
Compensation Committee establishes compensation programs that are designed to
reward executives for the achievement by the Company of net income goals and
the achievement by the executives of certain assigned objectives. By tying
compensation in part to particular goals, the Compensation Committee believes
that a performance-oriented environment is created for the Company's
executives. Finally, the Company's executive compensation programs are
intended to provide executives with an equity interest in the Company so as to
link a portion of the compensation of the Company's executives with the
performance of the Company's Common Stock.
The compensation programs for the Company's executives (other than Messrs.
Norton, Lasker and Lubin, the Company's founders and its Chief Executive
Officer and two Co-Chairmen) generally consist of three elements based upon
the foregoing objectives: base salary; annual cash bonus; and a stock-based
equity incentive in the form of participation in the Company's stock option
plans. In establishing base salaries for executives, the
7
<PAGE>
Compensation Committee monitors salaries at other companies, particularly
those that are in the same industry as the Company or related industries
and/or located in the same general geographic area as the Company, considers
historic salary levels of the individual and the nature of the individual's
responsibilities and compares the individual's base salary with those of other
executives at the Company. To the extent determined to be appropriate, the
Compensation Committee also considers general economic conditions, the
Company's financial performance and the individual's performance in
establishing base salaries of executives.
Messrs. Norton, Lasker and Lubin are parties to multi-year employment
agreements with the Company that fix the executive's annual base salary during
the term of the agreement, subject to increase (but not decrease) at the
discretion of the Board of Directors. The Compensation Committee believes that
the base salary levels provided for in these contracts establish appropriate
base salary levels for the covered individuals in light of the factors
described above. Moreover, these agreements include provisions prohibiting the
executive from soliciting any of the Company's employees or customers during
the term of the agreement and for a specified number of years thereafter.
The Compensation Committee generally structures cash bonuses by linking them
to annual net income goals and the achievement by the executives of certain
assigned objectives. The individual objectives set for executive officers of
the Company are generally both objective and subjective in nature and include
such goals as sales bookings, revenue, profit and departmental objectives. The
Compensation Committee believes that these arrangements tie the executive's
performance closely to a key measure of success of the Company or the
executive's business unit. None of Messrs. Norton, Lasker and Lubin was
entitled to a bonus in 1995. The Compensation Committee believes that the
substantial equity position in the Company held by these executive officers
provides them with adequate incentives.
Stock option grants in 1995 were designed to make a portion of the overall
compensation of the executive officers receiving such awards vary depending
upon the performance of the Company's Common Stock. As a result of the
applicable vesting arrangements, such grants also serve as a means for the
Company to retain the services of these individuals. In January 1995, the
Company granted options to each of the executive officers of the Company,
other than Messrs. Norton, Lasker and Lubin. The Compensation Committee
intends to evaluate the merits of option awards during 1996 and is considering
increasing the proportion of overall compensation of certain executive
officers consisting of stock options and/or other equity based incentives.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1,000,000 paid to its chief executive officer
and its four other most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. In this regard, the Company has limited the
number of shares subject to stock options which may be granted to Company
employees in a manner that complies with the performance-based requirements of
Section 162(m). Based on the compensation awarded to Messrs. Lasker, Lubin and
Norton and the other executive officers of the Company, it does not appear
that the Section 162(m) limitation will have a significant impact on the
Company in the near term. While the Committee does not currently intend to
qualify its incentive awards as a performance-based plan, it will continue to
monitor the impact of Section 162(m) on the Company.
Robert S. Kaplan
John F. Rockart
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Compensation Committee are Mr. Kaplan
and Dr. Rockart. No executive officer of the Company has served as a director
or member of the compensation committee (or other committee serving an
equivalent function) of any other entity, whose executive officers served as a
director of or member of the Compensation Committee of the Company.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company for the period from April 4, 1995 through December
31, 1995 with the cumulative total return on (i) the Nasdaq Composite Index,
and (ii) the Russel 2000 Index. The comparison assumes the investment of $100
on April 4, 1995 in the Company's Common Stock and in each of the indices and,
in each case, assumes reinvestment of all dividends. Prior to April 4, 1995,
the Company's Common Stock was not registered under the Exchange Act.
[GRAPH APPEARS HERE]
[COMPARATIVE STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
4/4/95 12/31/95
<S> <C> <C>
Renaissance Solutions, Inc. 100 110
Nasdaq Composite Index 100 129
Russel 2000 Index 100 121
</TABLE>
9
<PAGE>
PROPOSAL 1--APPROVAL OF AMENDMENT TO 1995 EQUITY INCENTIVE PLAN
The Board of Directors believes that the continued growth and profitability
of the Company depends, in large part, upon the ability of the Company to
maintain a competitive position in attracting and retaining key personnel. As
of August 31, 1996, 52,252 shares remained available for stock option grants
and restricted stock awards to the Company's employees under the 1995 Equity
Incentive Plan (the "Plan"). Accordingly, on September 18, 1996, the Board of
Directors adopted, subject to shareholder approval, an amendment (the
"Amendment") to the Plan increasing the number of shares of Common Stock
available for issuance under the Plan from 1,100,000 to 2,100,000 (subject to
adjustment for certain changes in the Company's capitalization). If the
Amendment is approved, the Company will have additional authorized shares of
Common Stock available for future grants and awards, including grants and
awards in connection with any merger, consolidation or acquisition by the
Company.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE AMENDMENT IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR"
THE APPROVAL OF THIS PROPOSAL.
Summary of the Plan
The following is a brief summary of the provisions of the Plan.
The Plan was adopted by the Board of Directors and approved by the
stockholders of the Company in January 1995. Under the terms of the Plan the
Company is authorized to make awards of restricted stock and to grant
incentive and non-statutory options to purchase shares of the Common Stock of
the Company to employees (including officers and employee directors) of, and
consultants and advisors to, the Company. Currently, a total of 1,100,000
shares of Common Stock may be issued upon exercise of options granted or
awards made under the Plan. As of August 31, 1996, (i) options to purchase a
total of 945,136 shares at a weighted average exercise price of $13.84 per
share were outstanding under the Plan, (ii) no restricted stock awards had
been made, and (iii) 52,252 shares remained available for future grants and
awards. These options generally vest in five equal annual installments
commencing on the date of grant.
The granting of options and awards under the Plan is discretionary, and the
Company cannot now determine the number or type of options and awards to be
granted in the future to any particular person or group. Pursuant to the Plan,
(i) Mr. Brebach, the Company's Executive Vice President--Client Services, and
Mr. McMillan, the Company's Vice President, Chief Financial Officer and Chief
Operating Officer, have received options to purchase 250,048 shares of Common
Stock and 56,256 shares of Common Stock, respectively, (ii) all current
executive officers of the Company, as a group, have received options to
purchase 431,328 shares of Common Stock, (iii) Mr. Kaplan, a non-employee
director, has received an option to purchase 12,004 shares of Common Stock,
and (iv) all employees, including all current officers who are not executive
officers, as a group, have received options to purchase 616,420 shares of
Common Stock.
Restricted stock awards and stock option grants under the Plan, and all
questions of interpretation with respect to the Plan, are determined by the
Board of Directors or by a committee appointed by the Board of Directors.
Stock option grants under the Plan entitle the optionee to purchase Common
Stock from the Company, for a specified exercise price, during the periods
specified in the applicable option agreement. The Board of Directors or the
committee, if one is designated, selects the persons to whom options are
granted, and determines the number of shares covered by each option, its
exercise price, its vesting schedule and its expiration date. Options are
generally not assignable or transferable except by will or the laws of descent
and distribution.
10
<PAGE>
Restricted stock awards under the Plan entitle the recipient to purchase
Common Stock from the Company under terms which provide for vesting over a
period of time and a right of repurchase of unvested stock when the
recipient's relationship with the Company terminates. The Board of Directors
or the committee, if one is designated, selects the recipients of restricted
stock awards, determines the times at which restricted stock awards are made,
and determines the number of shares of Common Stock subject to the award, the
purchase price (which can be less than the fair market value of the Common
Stock) and the vesting schedule for such shares. The recipients may not sell,
transfer or otherwise dispose of shares subject to a restricted stock award
until such shares are vested. Upon termination of the recipient's relationship
with the Company, the Company will be entitled to repurchase those shares
which are not vested on the termination date at a price equal to their
original purchase price.
As of August 31, 1996, the Company had approximately 148 employees
(including part-time employees and independent contractors and representing
138 full-time equivalent employees), all of whom were eligible to participate
in the Plan. The number of individuals receiving stock options or awards may
vary from year to year depending on various factors, such as the number of
promotions and the Company's hiring needs during the year, and thus the
Company cannot now determine award recipients.
Federal Income Tax Consequences
The following is a general summary of the federal income tax treatment of
incentive stock options, non-statutory stock options and restricted stock
awards granted under the Plan.
Incentive Stock Options. No taxable income will be recognized by an optionee
upon the grant or exercise of an incentive stock option granted under the Plan
(provided that the difference between the option exercise price and the fair
market value of the stock on the date of exercise must be included in the
optionee's "alternative minimum taxable income" as described below), and no
corresponding expense deduction will be available to the Company.
Generally, if an optionee holds shares acquired upon the exercise of
incentive stock options until the later of (i) two years from the grant of the
option and (ii) one year from the date of transfer of the purchased shares to
him or her (the "Statutory Holding Period"), any gain to the optionee upon a
sale of such shares will be treated as capital gain. The gain recognized upon
the sale of the stock is the difference between the option price and the sale
price of the stock. The net federal income tax effect on the holder of
incentive stock options is to defer, until the underlying stock is sold,
taxation of any increase in the stock's value from the time of grant to the
time of exercise, and to cause all such increase to be treated as capital
gain.
If the optionee sells the shares prior to the expiration of the Statutory
Holding Period (a "disqualifying disposition"), he or she will realize taxable
income at ordinary income tax rates in an amount equal to the lesser of (i)
the fair market value of the shares on the date of exercise less the option
price, or (ii) the amount realized on the sale less the option price, and the
Company will receive a corresponding business expense deduction. However,
special rules may apply to an optionee who is an officer or director. Any
additional gain will be treated as long-term capital gain if the shares are
held for more than one year prior to the sale and as short-term capital gain
if the shares are held for a shorter period. If the optionee sells the stock
for less than the option price, then he or she will recognize a capital loss
equal to the difference between the sale price and the option price. The loss
will be treated as a long-term capital loss if the shares are held for more
than one year prior to the sale and as a short-term capital loss if the shares
are held for a shorter period.
11
<PAGE>
For purposes of the "alternative minimum tax" applicable to individuals, the
exercise of an incentive stock option is treated in the same manner as the
exercise of a non-statutory stock option. Thus, an optionee must, in the year
of option exercise, include the difference between the exercise price and the
fair market value of the stock on the date of exercise in alternative minimum
taxable income. The alternative minimum tax is imposed upon an individual's
alternative minimum taxable income at rates of 26% to 28%, but only to the
extent that such tax exceeds the taxpayer's regular income tax liability for
the taxable year.
Restricted Stock. Neither the Company nor the recipient of a restricted
stock award under the Plan will realize any federal tax consequences at the
time the award is granted. If, however, the recipient makes a Section 83(b)
election within 30 days of the date of the grant, then the recipient will
recognize ordinary income, for the year in which the award is granted, in an
amount equal to the difference between the fair market value of the stock at
the time the award is granted and the purchase price paid for the stock. If
such election is made and the recipient subsequently forfeits some or all of
the shares, then the recipient generally will not be entitled to any tax
refund. If the Section 83(b) election is not made, then the recipient will
recognize ordinary income, at the time that the forfeiture provisions or
restrictions on transfer lapse, in an amount equal to the difference between
the fair market value of the stock at the time of such lapse and the original
purchase price paid for the stock. The Company will be entitled to deduct, as
a compensation expense, the same amount as the recipient is required to
recognize as ordinary income, in the same year as the recipient includes the
amount in income for federal tax purposes, subject to the limitations of
Section 162(m) of the Code.
Any additional gain or any loss recognized upon the disposition of stock
acquired pursuant to a restricted stock award will be a capital gain or loss,
and will be a long-term capital gain or loss if the shares are held for more
than one year. For this purpose, the holding period shall begin just after the
date on which the forfeiture provisions or restrictions lapse if a Section
83(b) election is not made, or just after the award is granted if a Section
83(b) election is made.
Non-Statutory Stock Options. No taxable income is recognized by the optionee
upon the grant of a non-statutory stock option under the Plan. The optionee
must recognize as ordinary income in the year in which the option is exercised
the amount by which the fair market value of the purchased shares on the date
of exercise exceeds the option price (and the Company is required to withhold
an appropriate amount for tax purposes). However, special rules apply to
options held by officers and directors. The Company will be entitled to a
business expense deduction equal to the amount of ordinary income recognized
by the optionee, subject to the limitations of Section 162(m) of the Code. Any
additional gain or any loss recognized upon the subsequent disposition of the
purchased shares will be a capital gain or loss, and will be a long-term gain
or loss if the shares are held for more than one year.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal that a stockholder intends to present at the 1997 Annual
Meeting of Stockholders must be submitted to the Secretary of the Company at
its offices, Lincoln North, 55 Old Bedford Road, Lincoln, Massachusetts 01773,
no later than December 12, 1996 in order to be considered for inclusion in the
Proxy Statement relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other business should come before the Meeting, it is the
12
<PAGE>
intention of the persons named in the enclosed Proxy to vote, or otherwise
act, in accordance with their best judgment on such matters.
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, telegraph,
facsimile and personal interviews. The Company will also request brokerage
houses, custodians, nominees and fiduciaries to forward copies of the proxy
material to those persons for whom they hold shares and request instructions
for voting the Proxies. The Company will reimburse such brokerage houses and
other persons for their reasonable expenses in connection with this
distribution.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors,
Harry M. Lasker,
Secretary
October 22, 1996
13
<PAGE>
RENAISSANCE SOLUTIONS, INC.
1995 EQUITY INCENTIVE PLAN
1. Purpose.
-------
The purpose of this plan (the "Plan") is to secure for Renaissance
Solutions, Inc. (the "Company") and its shareholders the benefits
arising from capital stock ownership by employees, officers and
directors of, and consultants or advisors to, the Company and its
parent and subsidiary corporations who are expected to contribute to
the Company's future growth and success. Except where the context
otherwise requires, the term "Company" shall include the parent and all
present and future subsidiaries of the Company as defined in Sections
424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or
replaced from time to time (the "Code").
2. Type of Options and Awards; Administration.
------------------------------------------
(a) Types of Options and Awards. Options granted pursuant to the
---------------------------
Plan shall be authorized by action of the Board of Directors of the
Company (or a Committee designated by the Board of Directors) and may
be either incentive stock options ("Incentive Stock Options") meeting
the requirements of Section 422 of the Code or non-statutory options
which are not intended to meet the requirements of Section 422 of the
Code. Awards granted pursuant to the Plan shall be authorized by action
of the Board of Directors of the Company (or a Committee designated by
the Board of Directors) and shall meet the requirements of Section 13
of the Plan.
(b) Administration. The Plan will be administered by the Board of
--------------
Directors of the Company, whose construction and interpretation of the
terms and provisions of the Plan shall be final and conclusive. The
Board of Directors may in its sole discretion (i) grant options to
purchase shares of the Company's Common Stock (as defined in Section 4
of the Plan), and issue shares upon exercise of such options as
provided in the Plan and (ii) make awards for the purchase of shares of
Common Stock pursuant to Section 13 of the Plan. The Board shall have
authority, subject to the express provisions of the Plan, to construe
the respective option agreements, awards and the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option agreements
and awards, which need not be identical, and to make all other
determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the
<PAGE>
Plan. The Board of Directors may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option
agreement or award in the manner and to the extent it shall deem
expedient to carry the Plan into effect and it shall be the sole and
final judge of such expediency. No director or person acting pursuant
to authority delegated by the Board of Directors shall be liable for
any action or determination made in good faith. The Board of Directors
may, to the full extent permitted by or consistent with applicable laws
or regulations (including, without limitation, applicable state law and
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), or any successor rule ("Rule 16b-3")), delegate any or
all of its powers under the Plan to a committee (the "Committee")
appointed by the Board of Directors, and if the Committee is so
appointed all references to the Board of Directors in the Plan shall
mean and relate to such Committee to the extent authority is so
delegated to such Committee.
(c) Applicability of Rule 16b-3. Those provisions of the Plan
---------------------------
which make express reference to Rule 16b-3 shall apply only to such
persons as are required to file reports under Section 16(a) of the
Exchange Act (a "Reporting Person").
3. Eligibility.
-----------
(a) General. Options and awards may be granted or made to persons
-------
who are, at the time of grant, employees, officers or directors (so
long as such officers and directors are also employees) of, or
consultants or advisors to, the Company; provided, that the class of
--------
individuals to whom Incentive Stock Options may be granted shall be
limited to all employees of the Company; and provided further that
-------- -------
non-employee directors of the Company are not eligible to receive
options or awards of restricted stock under the Plan. A person who has
been granted an option or award may, if he or she is otherwise
eligible, be granted additional options or awards if the Board of
Directors shall so determine. Subject to adjustment as provided in
Section 16 below, the maximum number of shares with respect to which
options or restricted stock awards may be granted to any person under
the Plan shall not exceed 50,000 shares of Common Stock during any
calendar year during the term of the Plan. For the purpose of
calculating such maximum number, (a) an option or award shall continue
to be treated as outstanding notwithstanding its repricing,
cancellation or expiration and (b) the repricing of an outstanding
option or award or the issuance of a new option or award in
substitution for a cancelled option or award shall be deemed to
constitute the grant of a new additional option or award, as the case
may be, separate from the original grant that is repriced or cancelled.
-2-
<PAGE>
(b) Grant of Options to Directors and Officers. The selection of a
------------------------------------------
director or an officer (as the terms "director" and "officer" are
defined for purposes of Rule 16b-3) as a participant, the timing of the
option grant or award, the exercise price of the option or the sale
price of the award and the number of shares for which an option or
award may be granted to such director or officer shall be determined
either (i) by the Board of Directors, of which all members shall be
"disinterested persons" (as hereinafter defined), or (ii) by a
committee of two or more directors having full authority to act in the
matter, of which all members shall be "disinterested persons." For the
purposes of the Plan, a director shall be deemed to be "disinterested"
only if such person qualifies as a "disinterested person" within the
meaning of Rule 16b-3, as such term is interpreted from time to time.
4. Stock Subject to Plan.
---------------------
Subject to adjustment as provided in Section 16 below, the total
number of shares which may be issued and sold under the Plan is
1,100,000 shares of Common Stock, $.01 par value per share ("Common
Stock"). If an option granted under the Plan shall expire or terminate
for any reason without having been exercised in full, the unpurchased
shares subject to such option shall again be available for subsequent
option grants or awards under the Plan.
5. Forms of Option Agreements.
--------------------------
As a condition to the grant of an option under the Plan, each
recipient of an option shall execute an option agreement in such form
not inconsistent with the Plan as may be approved by the Board of
Directors. Such option agreements may differ among recipients.
6. Purchase Price Upon Exercise of Options.
---------------------------------------
(a) General. The purchase price per share of Common Stock
-------
deliverable upon the exercise of an option shall be determined by the
Board of Directors, provided, however, that in the case of an Incentive
-------- -------
Stock Option, the exercise price shall not be less than 100% of the
fair market value of such stock, as determined by the Board of
Directors, at the time of grant of such option, or less than 110% of
such fair market value in the case of options described in Section
11(b).
(b) Payment of Purchase Price. Options granted under the
-------------------------
Plan may provide for the payment of the exercise price by delivery
of cash or a check to the order of the Company in an amount equal
-3-
<PAGE>
to the exercise price of such options, or, to the extent provided in
the applicable option agreement, (i) by delivery to the Company of
shares of Common Stock of the Company already owned by the optionee
having a fair market value equal in amount to the exercise price of the
options being exercised, (ii) by any other means (including without
limitation by delivery of a promissory note of the optionee payable on
such terms as are specified by the Board of Directors) which the Board
of Directors determines are consistent with the purpose of the Plan and
with applicable laws and regulations (including, without limitation,
the provisions of Rule 16b-3 and Regulation T promulgated by the
Federal Reserve Board) or (iii) by any combination of such methods of
payment. The fair market value of any shares of the Company's Common
Stock or other non-cash consideration which may be delivered upon
exercise of an option shall be determined in such manner as may be
prescribed by the Board of Directors.
7. Option Period.
-------------
Each option and all rights thereunder shall expire on such date as
shall be set forth in the applicable option agreement, except that such
date, in the case of an Incentive Stock Option, shall in no case be
later than ten years after the date on which the option is granted.
8. Exercise of Options.
-------------------
Each option granted under the Plan shall be exercisable either in
full or in installments at such time or times and during such period as
shall be set forth in the agreement evidencing such option, subject to
the provisions of the Plan.
9. Nontransferability of Options.
-----------------------------
Incentive Stock Options, and all options granted to Reporting
Persons, shall not be assignable or transferable by the person to whom
it is granted, either voluntarily or by operation of law, except by
will or the laws of descent and distribution, and, during the life of
the optionee, shall be exercisable only by the optionee; provided,
however, that non-statutory options granted to Reporting Persons may be
transferred pursuant to a qualified domestic relations order (as
defined in Rule 16b-3).
10. Effect of Termination of Employment or Other Relationship.
---------------------------------------------------------
The Board of Directors shall determine the period of time during
which an optionee may exercise an option following (i) the termination
of the optionee's employment or other relationship with the Company or
(ii) the death or disability of the optionee.
-4-
<PAGE>
Such periods shall be set forth in the agreement evidencing such
option.
11. Incentive Stock Options.
-----------------------
Options granted under the Plan which are intended to be Incentive
Stock Options shall be subject to the following additional terms and
conditions:
(a) Express Designation. All Incentive Stock Options granted under
-------------------
the Plan shall, at the time of grant, be specifically designated as
such in the option agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock
---------------
Option is to be granted under the Plan is, at the time of the grant of
such option, the owner of stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company (after
taking into account the attribution of stock ownership rules of Section
424(d) of the Code), then the following special provisions shall be
applicable to the Incentive Stock Option granted to such individual:
(i) The purchase price per share of the Common Stock subject
to such Incentive Stock Option shall not be less than 110% of the
fair market value of one share of Common Stock at the time of
grant; and
(ii) The option exercise period shall not exceed five years
from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide,
-----------------
options granted to any employee under the Plan (and any other incentive
stock option plans of the Company) which are intended to constitute
Incentive Stock Options shall not constitute Incentive Stock Options to
the extent that such options, in the aggregate, become exercisable for
the first time in any one calendar year for shares of Common Stock with
an aggregate fair market value (determined as of the respective date or
dates of grant) of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive
----------------------------------------------
Stock Option may be exercised unless, at the time of such exercise, the
optionee is, and has been continuously since the date of grant of his
or her option, employed by the Company, except that:
(i) an Incentive Stock Option may be exercised within
the period of three months after the date the optionee ceases
-5-
<PAGE>
to be an employee of the Company (or within such lesser period as
may be specified in the applicable option agreement), provided,
--------
that the agreement with respect to such option may designate a
longer exercise period and that the exercise after such
three-month period shall be treated as the exercise of a
non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the Company,
or within three months after the optionee ceases to be such an
employee, the Incentive Stock Option may be exercised, by the
person to whom it is transferred by will or the laws of descent
and distribution, within the period of one year after the date of
death (or within such lesser period as may be specified in the
applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning of
Section 22(e)(3) of the Code or any successor provision thereto)
while in the employ of the Company, the Incentive Stock Option may
be exercised within the period of one year after the date the
optionee ceases to be such an employee because of such disability
(or within such lesser period as may be specified in the
applicable option agreement).
For all purposes of the Plan and any option or award granted hereunder,
"employment" shall be defined in accordance with the provisions of
Section 1.421-7(h) of the Income Tax Regulations (or any successor
regulations). Notwithstanding the foregoing provisions, no stock option
may be exercised after its expiration date.
12. Additional Provisions.
---------------------
(a) Additional Option Provisions. The Board of Directors may, in
----------------------------
its sole discretion, include additional provisions in any option
granted under the Plan, including without limitation restrictions on
transfer, repurchase rights, commitments to pay cash bonuses, to make,
arrange for or guaranty loans or to transfer other property to
optionees upon exercise of options, or such other provisions as shall
be determined by the Board of Directors; provided that such additional
-------------
provisions shall not be inconsistent with any other term or condition
of the Plan.
(b) Acceleration, Extension, Etc. The Board of Directors may, in
----------------------------
its sole discretion, (i) accelerate the date or dates on which all or
any particular option or options granted under the Plan may be
exercised or (ii) extend the dates during which all or any particular
option or options granted under the Plan may be
-6-
<PAGE>
exercised; provided, however, that no such extension shall be permitted
if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3.
13. Awards.
------
A restricted stock award (an "award") shall consist of the sale
and issuance by the Company of shares of Common Stock, and the purchase
by the recipient of such shares, subject to the terms, conditions and
restrictions described in the document evidencing the award and in this
Section 13 and elsewhere in the Plan.
(a) Execution of Restricted Stock Award Agreement. As a condition
---------------------------------------------
to an award under the Plan, each recipient of an award shall execute an
agreement in such form, which may differ among recipients, as shall be
specified by the Board of Directors at the time of such award.
(b) Price. The Board of Directors shall determine the price at
-----
which shares of Common Stock shall be sold to recipients of awards
under the Plan. The Board of Directors may, in its discretion, issue
shares pursuant to awards without the payment of any cash purchase
price by the recipients or issue shares pursuant to awards at a
purchase price below the then fair market value of the Common Stock. If
a purchase price is required to be paid, it shall be paid in cash or by
check payable to the order of the Company at the time that the award is
accepted by the recipient, or by such other means as may be approved by
the Board of Directors.
(c) Number of Shares. The award shall specify the number of
----------------
shares of Common Stock granted thereunder.
(d) Restrictions on Transfer. In addition to such other terms,
-----------------------
conditions and restrictions upon awards as shall be imposed by the
Board of Directors, all shares issued pursuant to an award shall be
subject to the following restrictions:
(1) All shares of Common Stock subject to an award (including
any shares issued pursuant to paragraph (e) of this Section) shall
be subject to certain restrictions on disposition and obligations
of resale to the Company as provided in subparagraph (2) below for
the period specified in the document evidencing the award, and
shall not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of until such restrictions lapse. The period
during which such restrictions are applicable is referred to as
the "Restricted Period."
-7-
<PAGE>
(2) In the event that a recipient's employment with the
Company (or consultancy or advisory relationship, as the case may
be) is terminated within the Restricted Period, whether such
termination is voluntary or involuntary, with or without cause, or
because of the death or disability of the recipient, the Company
shall have the right and option for a period of three months
following such termination to buy for cash that number of the
shares of Common Stock purchased under the award as to which the
restrictions on transfer and the forfeiture provisions contained
in the award have not then lapsed, at a price equal to the price
per share originally paid by the recipient. If such termination
occurs within the last three months of the applicable
restrictions, the restrictions and repurchase rights of the
Company shall continue to apply until the expiration of the
Company's three month option period.
(3) Notwithstanding subparagraphs (1) and (2) above, the
Board of Directors may, in its discretion, either at the time that
an award is made or at any time thereafter, waive its right to
repurchase shares of Common Stock upon the occurrence of any of
the events described in this paragraph (d) or remove or modify any
part or all of the restrictions. In addition, the Board of
Directors may, in its discretion, impose upon the recipient of an
award at the time of such award such other restrictions on any
shares of Common Stock issued pursuant to such award as the Board
of Directors may deem advisable.
(e) Additional Shares. Any shares received by a recipient of an
-----------------
award as a stock dividend on, or as a result of stock splits,
combinations, exchanges of shares, reorganizations, mergers,
consolidations or otherwise with respect to, shares of Common Stock
received pursuant to such award shall have the same status and shall
bear the same restrictions, all on a proportionate basis, as the shares
initially purchased pursuant to such award.
(f) Transfers in Breach of Award. If any transfer of shares
----------------------------
purchased pursuant to an award is made or attempted contrary to the
terms of the Plan and of such award, the Board of Directors shall have
the right to purchase for the account of the Company those shares from
the owner thereof or his or her transferee at any time before or after
the transfer at the price paid for such shares by the person to whom
they were awarded under the Plan. In addition to any other legal or
equitable remedies which it may have, the Company may enforce its
rights by specific performance to the extent permitted by law. The
Company may refuse for any purpose to recognize as a shareholder of the
Company any
-8-
<PAGE>
transferee who receives any shares contrary to the provisions of the
Plan and the applicable award or any recipient of an award who breaches
his or her obligation to resell shares as required by the provisions of
the Plan and the applicable award, and the Company may retain and/or
recover all dividends on such shares which were paid or payable
subsequent to the date on which the prohibited transfer or breach was
made or attempted.
(g) Additional Award Provisions. The Board of Directors may, in
---------------------------
its sole discretion, include additional provisions in any award granted
under the Plan, including without limitation commitments to pay cash
bonuses, make, arrange for or guarantee loans or transfer other
property to recipients upon the grant of awards, or such other
provisions as shall be determined by the Board of Directors.
14. General Restrictions.
--------------------
(a) Investment Representations. The Company may require any person
--------------------------
to whom an option or award is granted, as a condition of exercising
such option or purchasing the shares subject to the award, to give
written assurances in substance and form satisfactory to the Company to
the effect that such person is acquiring the Common Stock subject to
the option or award for his or her own account for investment and not
with any present intention of selling or otherwise distributing the
same, and to such other effects as the Company deems necessary or
appropriate in order to comply with federal and applicable state
securities laws.
(b) Compliance With Securities Laws. Each option and award shall
-------------------------------
be subject to the requirement that if, at any time, counsel to the
Company shall determine that the listing, registration or qualification
of the shares subject to such option or award upon any securities
exchange or under any state or federal law, or the consent or approval
of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is
necessary as a condition of, or in connection with, the issuance or
purchase of shares thereunder, such option or award may not be
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval, or satisfaction of such condition
shall have been effected or obtained on conditions acceptable to the
Board of Directors. Nothing herein shall be deemed to require the
Company to apply for or to obtain such listing, registration or
qualification, or to satisfy such condition.
-9-
<PAGE>
15. Rights as a Shareholder.
-----------------------
The holder of an option or recipient of an award shall have no
rights as a shareholder with respect to any shares covered by the
option or award (including, without limitation, any rights to receive
dividends or non-cash distributions with respect to such shares) until
the date of issue of a stock certificate to him or her for such shares.
No adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
16. Adjustment Provisions for Recapitalizations and Related
-------------------------------------------------------
Transactions.
------------
(a) General. If, through or as a result of any merger,
-------
consolidation, sale of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar
transaction, (i) the outstanding shares of Common Stock are increased
or decreased or are exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or
other securities, an appropriate and proportionate adjustment shall be
made in (x) the maximum number and kind of shares reserved for issuance
under the Plan, (y) the number and kind of shares or other securities
subject to then outstanding options under the Plan, and (z) the price
for each share subject to any then outstanding options under the Plan
or repurchase rights of the Company, without changing the aggregate
purchase price as to which such options remain exercisable, provided
that no adjustment shall be made pursuant to this Section 16 if such
adjustment would cause the Plan to fail to comply with Section 422 of
the Code or with Rule 16b-3.
(b) Board Authority to Make Adjustments. Any adjustments under
-----------------------------------
this Section 16 will be made by the Board of Directors, whose
determination as to what adjustments, if any, will be made and the
extent thereof will be final, binding and conclusive. No fractional
shares will be issued under the Plan on account of any such
adjustments.
17. Merger, Consolidation, Asset Sale, Liquidation, etc.
---------------------------------------------------
(a) General. In the event of a consolidation or merger in which
-------
outstanding shares of Common Stock are exchanged for securities, cash
or other property of any other corporation or business entity or in the
event of a liquidation of the Company or
-10-
<PAGE>
sale of all or substantially all of the assets of the Company, the
Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company, may, in its
discretion, take any one or more of the following actions, as to
outstanding options and awards: (i) provide that such options shall be
assumed, or equivalent options shall be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof), provided that any
--------
such options substituted for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, (ii) upon written notice to
the optionees, provide that all unexercised options will terminate
immediately prior to the consummation of such transaction unless
exercised by the optionee within a specified period following the date
of such notice, (iii) in the event of a merger under the terms of which
holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment for each share surrendered in the
merger (the "Merger Price"), make or provide for a cash payment to the
optionees equal to the difference between (A) the Merger Price times
the number of shares of Common Stock subject to such outstanding
options (to the extent then exercisable at prices not in excess of the
Merger Price) and (B) the aggregate exercise price of all such
outstanding options in exchange for the termination of such options,
and (iv) provide that all or any outstanding options shall become
exercisable in full, any restrictions on exercising outstanding options
issued pursuant to the Plan prior to any given date shall terminate and
any restrictions on and rights of the Company to repurchase shares
covered by outstanding awards issued pursuant to the Plan shall
terminate.
(b) Substitute Options. The Company may grant options under the
------------------
Plan in substitution for options held by employees of another
corporation who become employees of the Company, or a subsidiary of the
Company, as the result of a merger or consolidation of the employing
corporation with the Company or a subsidiary of the Company, or as a
result of the acquisition by the Company, or one of its subsidiaries,
of property or stock of the employing corporation. The Company may
direct that substitute options be granted on such terms and conditions
as the Board of Directors considers appropriate in the circumstances.
18. No Special Employment Rights.
----------------------------
Nothing contained in the Plan or in any option or award shall
confer upon any recipient of an award or optionee any right with
respect to the continuation of his or her employment by the Company or
interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation
of the optionee.
-11-
<PAGE>
19. Other Employee Benefits.
-----------------------
Except as to plans which by their terms include such amounts as
compensation, neither the amount of any compensation deemed to be
received by an employee as a result of the exercise of an option or the
sale of shares received upon such exercise nor the value of an award
granted to an employee will constitute compensation with respect to
which any other employee benefits of such employee are determined,
including, without limitation, benefits under any bonus, pension,
profit-sharing, life insurance or salary continuation plan, except as
otherwise specifically determined by the Board of Directors.
20. Amendment of the Plan.
---------------------
(a) The Board of Directors may at any time, and from time to time,
modify or amend the Plan in any respect, except that if at any time the
approval of the shareholders of the Company is required as to such
modification or amendment under Section 422 of the Code or any
successor provision with respect to Incentive Stock Options or under
Rule 16b-3 with respect to options held by or awards made to Reporting
Persons, the Board of Directors may not effect such modification or
amendment without such approval.
(b) The termination or any modification or amendment of the Plan
shall not, without the consent of an optionee or recipient of an award,
affect his or her rights under an option or award previously granted to
him or her. With the consent of the optionee or recipient of the award
affected, the Board of Directors may amend outstanding option
agreements or awards in a manner not inconsistent with the Plan. The
Board of Directors shall have the right to amend or modify (i) the
terms and provisions of the Plan and of any outstanding Incentive Stock
Options granted under the Plan to the extent necessary to qualify any
or all such options for such favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code and (ii) the
terms and provisions of the Plan and of any outstanding option or award
to the extent necessary to ensure the qualification of the Plan under
Rule 16b-3 or any successor rule.
21. Withholding.
-----------
(a) The Company shall have the right to deduct from payments of
any kind otherwise due to the optionee or recipient of an award any
federal, state or local taxes of any kind required by law to be
withheld with respect to any shares issued upon exercise of options
under the Plan or the purchase of shares subject to the award. Subject
to the prior approval of the Company, which may be
-12-
<PAGE>
withheld by the Company in its sole discretion, the optionee or
recipient of an award may elect to satisfy such obligations, in whole
or in part, (i) by causing the Company to withhold shares of Common
Stock otherwise issuable pursuant to the exercise of an option or the
purchase of shares subject to an award or (ii) by delivering to the
Company shares of Common Stock already owned by the optionee or award
recipient. The shares so delivered or withheld shall have a fair market
value equal to such withholding obligation. The fair market value of
the shares used to satisfy such withholding obligation shall be
determined by the Company as of the date that the amount of tax to be
withheld is to be determined. An optionee or award recipient who has
made an election pursuant to this Section 21(a) may only satisfy his or
her withholding obligation with shares of Common Stock which are not
subject to any repurchase, forfeiture, unfulfilled vesting or other
similar requirements.
(b) Notwithstanding the foregoing, in the case of a Reporting
Person, no election to use shares for the payment of withholding taxes
shall be effective unless made in compliance with any applicable
requirements of Rule 16b-3.
(c) If the recipient of an award under the Plan elects, in
accordance with Section 83(b) of the Code, to recognize ordinary income
in the year of acquisition of any shares awarded under the Plan, the
Company will require at the time of such election an additional payment
for withholding tax purposes based on the difference, if any, between
the purchase price of such shares and the fair market value of such
shares as of the date immediately preceding the date of the award.
22. Cancellation and New Grant of Options, Etc.
------------------------------------------
The Board of Directors shall have the authority to effect, at any
time and from time to time, with the consent of the affected optionees,
(i) the cancellation of any or all outstanding options under the Plan
and the grant in substitution therefor of new options under the Plan
covering the same or different numbers of shares of Common Stock and
having an option exercise price per share which may be lower or higher
than the exercise price per share of the cancelled options or (ii) the
amendment of the terms of any and all outstanding options under the
Plan to provide an option exercise price per share which is higher or
lower than the then-current exercise price per share of such
outstanding options.
23. Effective Date and Duration of the Plan.
---------------------------------------
(a) Effective Date. The Plan shall become effective when
--------------
adopted by the Board of Directors, but no Incentive Stock Option
-13-
<PAGE>
granted under the Plan shall become exercisable unless and until the
Plan shall have been approved by the Company's shareholders. If such
shareholder approval is not obtained within twelve months after the
date of the Board's adoption of the Plan, no options previously granted
under the Plan shall be deemed to be Incentive Stock Options and no
Incentive Stock Options shall be granted thereafter. Amendments to the
Plan not requiring shareholder approval shall become effective when
adopted by the Board of Directors; amendments requiring shareholder
approval (as provided in Section 20) shall become effective when
adopted by the Board of Directors, but no Incentive Stock Option issued
after the date of such amendment shall become exercisable (to the
extent that such amendment to the Plan was required to enable the
Company to grant such Incentive Stock Option to a particular optionee)
unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained
within twelve months of the Board's adoption of such amendment, any
Incentive Stock Options granted on or after the date of such amendment
shall terminate to the extent that such amendment to the Plan was
required to enable the Company to grant such option to a particular
optionee. Subject to this limitation, options and awards may be granted
under the Plan at any time after the effective date and before the date
fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with
-----------
Section 17, the Plan shall terminate, with respect to Incentive Stock
Options, upon the earlier of (i) the close of business on the day next
preceding the tenth anniversary of the date of its adoption by the
Board of Directors, or (ii) the date on which all shares available for
issuance under the Plan shall have been issued pursuant to the exercise
or cancellation of options or the final vesting of awards granted under
the Plan. Unless sooner terminated in accordance with Section 17, the
Plan shall terminate with respect to options which are not Incentive
Stock Options and awards on the date specified in (ii) above. If the
date of termination is determined under (i) above, then options
outstanding on such date shall continue to have force and effect in
accordance with the provisions of the instruments evidencing such
options.
24. Provision for Foreign Participants.
----------------------------------
The Board of Directors may, without amending the Plan, modify
awards or options granted to participants who are foreign nationals or
employed outside the United States to recognize differences in laws,
rules, regulations or customs of such foreign
-14-
<PAGE>
jurisdictions with respect to tax, securities, currency, employee
benefit or other matters.
Adopted by the Board of Directors on
January 31, 1995
Approved by the Stockholders on
January 31, 1995
-15-
<PAGE>
AMENDMENT NO. 1 TO THE 1995 EQUITY INCENTIVE PLAN
OF RENAISSANCE SOLUTIONS, INC.
Section 4 of the 1995 Equity Incentive Plan (the "Plan") of Renaissance
Solutions, Inc. is hereby amended and restated in its entirety, subject to
stockholder approval, to provide as follows:
"Subject to adjustment as provided in Section 16 below, the total number of
shares which may be issued and sold under the Plan is 2,100,000 shares of Common
Stock, $.0001 par value per share ("Common Stock"). If an option granted under
the Plan shall expire or terminate for any reason without having been exercised
in full, the unpurchased shares subject to such option shall again be available
for subsequent option grants or awards under the Plan."
Adopted by the Board of
Directors on September 18, 1996
<PAGE>
PRELIMINARY COPIES
RENAISSANCE SOLUTIONS, INC.
SPECIAL MEETING OF STOCKHOLDERS - NOVEMBER 15, 1996
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned, revoking all prior proxies, hereby appoints Harry M.
X Lasker, David A. Lubin and David P. Norton, and each of them, with full power
Y of substitution, as Proxies to represent and vote as designated hereon all
shares of stock of Renaissance Solutions, Inc. (the "Company") which the
undersigned would be entitled to vote if personally present at the Special
Meeting of Stockholders of the Company to be held on Friday, November 15,
1996, at 10:00 a.m., Boston Time, at the offices of Hale and Dorr, 26th Floor,
60 State Street, Boston, Massachusetts and at any adjournment thereof, with
respect to the matters set forth on the reverse side hereof.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POST-PAID RETURN ENVELOPE.
-------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-------------
<PAGE>
X Please mark votes
- --- as in this example.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
1. To approve an amendment to
the Company's 1995 Equity
Incentive Plan (the "Plan")
increasing from 1,100,000
to 2,100,000 the number of
shares of Common Stock
authorized under the Plan.
For___ Against___ Abstain___
MARK HERE MARK HERE
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT___ THE MEETING___
IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
Please sign exactly as name appears
hereon. If the stock is registered in
the names of two or more persons, each
should sign. When signing as an
executor, administrator, trustee,
guardian, or attorney, please give full
title as such. If a corporation, please
sign in full corporate name by an
authorized officer. If a partnership,
please sign in full partnership name by
an authorized person.
Signature:___________________ Date:____ Signature:__________________ Date:____
